BRRRR vs. New Construction
Member since 2025 · 2 posts · 3 votes
BRRRR vs. New Construction
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MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
1yQuote from @Rebecca Pearman:
@Melissa Justice For example there is a 1950s home 2bd 1ba 1200 sq ft for 259,500 down the street from me. Could use some cosmetic work but not necessary. Alternatively, there is a brand new town home 3bd 2.5ba 1600 sq ft for 248k with 160/mo HOA.
SFH vs TH with HOA is like comparing apples to oranges if only basing on size/price.
17 Replies
- 1yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
First....what does 'fairly handy' mean? It makes a huge difference if you have the skills to frame a new addition and wire/plumb it vs just throwing some paint on an easy Rehab. Define your skills and be honest about it. Then you will know which trades you'll need to have on your team.
Basically, the numbers either work or they don't, it doesn't matter if it's a new build or a 100 yr old house. The numbers are the determining factor. Figure out your NET profit on the jobs...is it enough to meet your needs?
- Member since 2023 · 348 posts · 190 votes1y
Hi Rebecca!
Totally get where you're coming from - that first deal always feels like the hardest one to decide on. It’s great that you and your husband are handy, but it’s also smart that you’re being realistic about your time and energy.
Turnkey definitely has its appeal - less stress, faster to rent out, and fewer surprises - especially when you're just starting out. But as you mentioned, the quality of new construction can be hit or miss, and the trade-off is usually lower cash flow and a bigger chunk of money tied up (since you're bringing 20%+ down and likely won’t be pulling any equity out right away).
That's why so many investors love the BRRRR method - it's a way to stretch your capital, especially if you're looking to scale. Even if you go light on the rehab (cosmetic fixes vs full gut jobs), it can still give you instant equity, better returns, and a chance to refinance and recycle your cash for the next one. And with a good team, even first-timers can manage a BRRRR without getting in over their heads.
You don't have to swing for the fences on your first deal- it's more about getting in the game and learning as you go. Some people even start with a light BRRRR or buy a property that needs very minimal updates, just enough to improve value and rents. That could be a nice middle ground for you!
Happy to connect if you ever want to talk through numbers or funding options - I work with a lot of first-time investors and am always happy to help however I can 😊
- 1yMelissa JusticeBusiness MemberRental Property Investor · Phoenix, AZ · Member since 2024 · 519 posts · 1k+ votes
Hey Rebecca! You're already thinking like a smart investor-knowing your limits, assessing local options, and considering the long game. That’s the right mindset going into your first rental.
Here’s a breakdown to help you decide-
BRRRR Route Pros:
More equity upfront
Potentially higher cash flow
Good for scaling if done right
BUT: BRRRRs come with risk-contractor headaches, cost overruns, timeline delays. Even being handy, managing a rehab on your first deal can be overwhelming unless you already have a team in place and time to oversee it.
Turnkey or New Construction Pros--
Low maintenance from day one
No reno stress or delays
Easier to manage while learning
Still solid cash flow depending on the market
Yes, the build quality might not be top tier, but reliable rent, low maintenance, and peace of mind are worth a lot when starting out.
For your first deal, my suggestion would be to go turnkey or new construction-learn the ropes, build confidence, cash flow from day one. Then leverage that experience to take on BRRRRs later when you’re more comfortable with the process.
If you're open to out-of-state investing, turnkey homes in the Midwest or Southeast (like Birmingham, Memphis, Cleveland) offer great returns and investor-friendly teams already in place.
You’re on the right path-just don’t let the pressure to “do it all” slow your momentum. One solid, boring win beats a stressful flop every time.Always here to talk more about specific markets or run deal scenarios side by side.
Best of luck!
- Member since 2025 · 2 posts · 3 votes1y
@Melissa Justice For example there is a 1950s home 2bd 1ba 1200 sq ft for 259,500 down the street from me. Could use some cosmetic work but not necessary. Alternatively, there is a brand new town home 3bd 2.5ba 1600 sq ft for 248k with 160/mo HOA.
- MD/DC · Member since 2024 · 1k+ posts · 1k+ votes1y
Quote from @Rebecca Pearman:
@Melissa Justice For example there is a 1950s home 2bd 1ba 1200 sq ft for 259,500 down the street from me. Could use some cosmetic work but not necessary. Alternatively, there is a brand new town home 3bd 2.5ba 1600 sq ft for 248k with 160/mo HOA.
SFH vs TH with HOA is like comparing apples to oranges if only basing on size/price. - 1yMelissa JusticeBusiness MemberRental Property Investor · Phoenix, AZ · Member since 2024 · 519 posts · 1k+ votes
Quote from @Rebecca Pearman:
@Melissa Justice For example there is a 1950s home 2bd 1ba 1200 sq ft for 259,500 down the street from me. Could use some cosmetic work but not necessary. Alternatively, there is a brand new town home 3bd 2.5ba 1600 sq ft for 248k with 160/mo HOA.
I'd need more info on the props - feel free to DM me. :-)
- 2moJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
skip the HOA whenever possible.
- 1yTodd AndersonPro MemberReal Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes
I would be an advocate for the other strategy, New Construction.
I many areas the price of new construction is falling. I work is some areas that the price of new construction is now under existing homes. This is the first time in a very long time this has happened. This also takes into account the great incentives that you can find from builders. I have seen some incentives like Free Property management and Rate buydowns. I have worked with builders that have offered Rates as low as 3.75%. This type of incentive can make an investment work.
When i talk with investors that are still looking for BRRRR, the problems they have is after renovation and renting, they can't make the numbers work for the refinance. If they get long term financing at today's rates the property no longer cash flows.
The last point I would consider is appreciation. I think most investors would agree that a New house will appreciate with the comparables of new construction. This will normally move quicker that a home built 20,40 or 60 years ago.
Connect with me if you have more questions.
Best of Luck.
- 1yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
@Rebecca Pearman if you're going to just pay what a seller is asking, you probably should just buy new construction.
The whole point of a BRRR is to create or force equity. You do that by:
1) Buying UNDER market value => ARV minus (repairs + cost of your time + carry costs + risk)
2) Renovating for LESS than what an average contractor would charge
If you're not up to the challenge of a BRRR, turnkey new construction is probably a better option.
Of course, you could also buy a "used" turnkey that someone else has already renovated.
Logical Property Management4.9462 Reviews - Real Estate Agent · Washington, DC · Member since 2025 · 157 posts · 77 votes1y
Quote from @Rebecca Pearman:
I'm looking to invest in my first long term rental property and am struggling deciding which route to take. My husband and I are fairly handy but I'm worried about biting off more than we can chew. We have a lot of new construction/ cookie cutter homes going up for the same price point as any BRRRR I would buy. So Im starting to feel that buying something that is turnkey would be the better option for us. I do know that the quality of work in these homes isn't the best, but just looking at what's best for getting started.
Open to hearing any and all opinions!
Depending on how the new development is selling (or not selling), often times you can negotiate closing cost and upgrades into your deal with a builder. If it's a hot development that might not work to well. Also developers like to keep the money in house so it might be better to use their lender vs. yours.
What is your definition of handy? Go explore homes that match your criteria of handy. Always check the main systems and structure(roof,siding foundation if you can) as that's going to be a huge cost if they need to be replaced.
- 1yReginald TrussPro MemberLender · Toledo, OH · Member since 2015 · 1k+ posts · 96 votes
“Rebecca, I help a lot of investors run the numbers on BRRRR vs turnkey and line up funding for either route—want me to DM you a quick side-by-side example?”
Reggie Truss
- MD/DC · Member since 2024 · 1k+ posts · 1k+ votes4mo
Quote from @Account Closed:
Honestly for a first rental new construction makes more sense than most people admit. BRRRR sounds great until you're three weeks into a rehab and way over budget. Being handy helps but managing a renovation while tenants are waiting is a different thing entirely.
Went with West Homes in NC for my first one. The builder warranty was the part that really mattered - HVAC issue in month four, a door that wouldn't seal, minor electrical. All covered, zero out of pocket. With an older property those same issues would've been surprise expenses while I was still learning the landlord side.
Congratulations on your first property! Keep in mind for future deals that a decent contractor would have fixed those minor issues that early on and even if out of pocket only a couple of hundred dollars. I think the appeal of turnkey is generally over rated by the people touting them in most markets. A solid BRRR offers value generally in the form of immediate equity as well as likely higher cash flow and reduced competition most notably the option of purchasing new build in same neighborhood when selling.
- Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes4mo
There are pros and cons to both. BRRRR in theory gets all or most of your money back, allowing you to buy more. New construction in theory will have little to no repairs and capital expenditures for what could be decades.
Here is the challenge with new construction that needs to be said:
1. Appreciation is slow in the beginning. Keep in mind you are paying a premium for everything to be brand new. In a few years if you want to sell those systems are now used and buyers won't pay that same premium.
2. Also keep in mind if they are continuing to build, that just means competition. Why would someone buy your home that is 2-3 years old when there is new construction down the street? The only way you can compete would be on price. This is happening in parts of Texas and Florida because of all the building.
3. Your time is extremely valuable. I see posts all the time about "sweat equity" but they don't think about opportunity costs. Could I paint a wall? Sure. But in the hours it takes to paint how many more deals could I have analyzed to buy? And with a full time job what would take a painter 3 days takes me a week. What is a higher income producing activity?
Even if you aren't thinking about selling, you need to think long term should you want to do cash out refis or HELOCs to buy more properties.
- 4moBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
I agree with @Jules Aton. New construction sounds great and easy, but you lose the appreciation aspect amongst other things. And yes, any decent GC will fix that minor stuff, a 1-yr warranty is common with remodeled houses as far as I know....
- 3moMarvin ChapmanPro MemberRental Property Investor · Atlanta, GA · Member since 2025 · 18 posts · 10 votes
Hello Rebecca. I know that I am late in responding to your question. It presents an interesting subject, and I hope that my response will be relevant if you are still trying to decide.
With this being your first long term rental property. You must look at your situation. Are you and your husband take charge kind of people or are your hands off? Do you and your husband have the know how to buy, rehab, rent, refinance, and repeat a property or would it be a learning experience? Do you have the time to execute those tasks or the time to learn what could be an expensive lessons?
For a first-time long-term rental, the new turnkey option is very practical and presents several benefits. First, a vetted management company has already taken charge of development, leasing, and management. This saves you an enormous amount of time and money that you would have spent doing BRRRR or trying to learn how to do it. Now, you can devote that time to your career, family, and other obligations. Second, you will enjoy passive cash flow right away instead of facing the uncertainty and spent time that comes with vetting and leasing to a stable tenant. Third, maintenance issues are likely to be few because of the new status of the property. Additionally, the management company is available to handle any maintenance issues that come up and probably will have access to reputable contractors. Again, this will save you and your husband valuable time. Fourth, a new turnkey home, if it appraises and passes inspection, would be easier to finance and more certain as opposed to a BRRRR that could result in unexpected out of pocket expenses because of cost overruns in the rehab and the difficulty of refinancing at a desired amount.
If you do not have the time to do it yourself or learn lessons that would be the equivalent of “biting off more than we can chew,” then the new turnkey option is for you.
Reach out to me if you have any questions.
- Member since 2026 · 7 posts · 1 vote2mo
Old thread, but I'll chime in. We went the new construction route with West Homes in Virginia for a rental property and it was a solid decision. No surprise repairs, and tenants were happy to pay a bit more for a modern build with good insulation and efficient systems.
It wasn't the cheapest upfront, but the lower maintenance costs made it worth it. New construction also means you can pick layouts that appeal to renters, things like open floor plans and better storage.
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